1) A newspaper recently lowered its price from $3 to $1. As it did, the number of newspapers sold increased from 240,000 to 280,000.
(a) What was the newspaper's price elasticity of demand? Show your work.
(b) Given that elasticity, did it make sense for the newspaper to lower its price?
2) Once a book has written, would an author facing an elastic demand curve for the book prefer to raise or lower the book's price? Why?
3)When the price of ketchup rises by 15 percent, the demand for the hot dogs falls by 1 percent.
a. Calculate the cross-price elasticity of demand. Show you work.
b) Are the goods complements or substitutes. Explain answer.
4) When Jerrica's income rises by 2 percent, the quantity of DVD she buys each week increased by 4 percent.
a. Calculate income elasticity. Show work
b. Indicate whether DVD is a necessity, luxury, or inferior good for Jerrica. Explain answer
5) The price elasticity of demand of I-padis 0.6. If price of I-pad decreases by 2 percent, by what percentage will the quantity of I-pad demanded Change. Show work